Market Wrap: Bullish Basel News Causes BTC Jump to Week-High $38K Level; ETH Slips

Bitcoin has returned to the spotlight on positive cryptocurrency banking news out of Europe. Ether’s shine is diminishing a bit Thursday based on some volume, volatility and options data.

Bitcoin, the world’s largest cryptocurrency by market capitalization, was up Thursday by 1% as of press time. The price was below the 10-hour moving average but above the 50-hour, a sideways signal for market technicians. 

The price of bitcoin climbed from $36,304 at 09:15 UTC (5:15 a.m. ET) to $38,200 by 10:45 UTC (6:45 a.m. ET), a 5.2% gain in less than two hours based on CoinDesk 20 data. Bitcoin then lost steam, down to $36,732 as of press time.

One factor that may have had an impact on bitcoin’s briefly surging price: The Bank for International Settlements' Basel Committee, a European regulatory agency, attempting to place much-needed rules Thursday around banks being allowed to hold various cryptocurrencies. 

The last time BTC was able to get over the $38,000 level was on June 3.

It is possible BTC prices are currently more beholden to big balance holders, known as whales, than retail activity, at least according to one trader. 

“Whales are causing waves that right now seem to counter the breakouts bitcoin has seemed to attempt for weeks now,” said Henrik Kugelberg, a crypto over-the-counter trader.

From Tuesday to Wednesday, bitcoin’s annualized 30-day volatility increased by eight percentage points to 97%. That may seem significant, but ether tops the list of 10 major crypto assets tracked by CoinDesk, with a volatility reading of about 162%. 

“The market seems to have settled somewhere in between downside fear and a wait and see approach,” the quant trading firm QCP said in a recent investor note. “Retail volumes have thinned out and movements from whales are dominating the price action.”

Ether’s sky-high volatility is caused by its recent higher volumes than bitcoin, at least according to one analyst. 

“The extreme volatility drove ETH to have higher volumes than BTC,” said Rich Rosenblum, co-founder of crypto market maker GSR. “Now that there is less leverage in the system, I see BTC volumes outpacing ETH for the next few weeks, as BTC's larger market cap plays a bigger role" than volume.

On Wednesday, ETH volumes exceeded those for BTC, a reversal from the recent trend. Prior to Wednesday, when $53 billion BTC changed hands compared with ETH’s $43 billion traded, ether had an 11-day run of more volume than its larger rival. 

Kugelberg, the over-the-counter trader, thinks BTC may be due for a return to the spotlight. 

“ETH is, of course, enormously important and always seems to go three times the length of any bitcoin bull run,” Kugelberg said. “Bitcoin is building for another run, as I see it, and that is always starting with a rise in volume. El Salvador [and its plan to make bitcoin legal tender] may well be the igniting thing here.”

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The second-largest cryptocurrency by market capitalization, ether, was trading around $2,465 as of 21:00 UTC (4:00 p.m. ET), gaining 3.8% over the prior 24 hours. The asset is below the 10-hour moving average and the 50-hour, a bearish indicator for market technicians. 

Ether went from $2,600 at 10:30 UTC (6:30 a.m. ET) to $2,451 by 05:30 UTC (1:30 p.m. ET) Thursday, a 5.7% tumble based on CoinDesk 20 data. ETH has slightly trended upward a bit since, at $2,465 as of press time.  

Ether’s drop in volume and in price recently certainly has exuded some bearishness for the asset. In addition, the options market is forecasting more ether price exhaustion, according to data aggregator Skew. 

Probabilities for ETH spot price at July 21 expiration based on options orientation expects a 44% chance of ether over $2,400, at 31% possibility over $2,800, and only a 21% expectation of spot ether over $3,200 by that time.

Some long-term crypto traders sense fundamental bearishness with ether because the asset is reliant on a lot of unknowns in a complex Ethereum ecosystem to remain successful. 

“I have stupidly not gotten into ether since I very early on felt that the governance issues and from time-to-time extreme gas prices would not be competitive in the long run,” noted crypto trader Kugelberg. 

Ethereum’s gas prices, or fees for using the network, have actually hit a three-month low this week.

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Digital assets on the CoinDesk 20 are mostly lower Thursday. One notable winner as of 21:00 UTC (4:00 p.m. ET):

Notable losers:

Equities:

Commodities:

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Treasurys: